<Nate Hagens : Natural Gas Cliff and Credit Situation on Global Public Media The Oil Drum DrumBeat: December 30, 2008>

27 comments on My Top 10 Energy Stories of 2008

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Gail the Actuary on December 29, 2008 - 9:27pm Permalink | Subthread | Parent | Comments top

Regarding oil available for use, we really have three issues:

1. The trend in the amount of oil coming out of the ground. With low prices, this will soon approach the natural decline rate (perhaps 7% for oil, much more for natural gas) because it will not make economic sense to drill more wells. If prices increase, there may be some mitigation, but we are still likely on the downside of the slope. A best-case example of what might happen is the US decline rate. In the US, with infill drilling, new discoveries, and EOR, the decline rate is still around 2% per year.

2. The increase in energy efficiency. In the US, the figures I have seen have been about 2% per year. It is difficult to see how this can be increased dramatically, especially with the current lack of capital for investment.

3. The decrease in net supply, due to declining EROEI. Years ago, this was negligible, but with oil being found in more and more difficult locations, more oil is required simply to get the oil out of the ground.

Given this combination of factors, energy from oil is likely flat to decreasing, even considering the growth in energy efficiency.

On the other side of the equation is the amount of growth required to continue to fund debt. It seems to me that in order to pay back loans with interest, the economy needs enough growth to fund the "real" interest rate. Normally, I would expect this to be on the order of 2% to 3% a year.

Comparing needed economic growth to what we are likely to generate with available oil and gas, it seems like we are facing a continuing problem.

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Dryki on December 30, 2008 - 12:01am Permalink | Subthread | Parent | Comments top

It is difficult to see how this can be dramatically, especially with the current lack of capital for investment.

And the generation of that capital - whether money or resources - itself depends on energy.

cfm - loving it when a plan comes together - in Gray, ME

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Engineer-Poet on December 30, 2008 - 1:02am Permalink | Subthread | Parent | Comments top

How many wedges would it take to hit 7% decrease in demand per year?

35 MPG average for the new-model fleet:  maybe 2.2%/year.

Increase to 20% ride-sharing over 10 years:  2%/year.

Organizing and trip-optimizing shopping and other errands:  ??

Building or repurposing stores/offices in residential areas, and vice versa:  ??

Even at a mere 10 million vehicles/year, the USA replaces about 5% of its fleet every year.  If a substantial fraction of the replacements were electric, they'd account for a pretty good wedge themselves.  We can certainly get electricity:  coal and natural gas in the next few year, nuclear for the next 50 while wind and solar are built out, then wind and solar until the sun's brightening makes life impossible on Earth.  That's well beyond my personal horizon.

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pragma on December 30, 2008 - 1:51am Permalink | Subthread | Parent | Comments top

Gail, T-S.

Thanks, I think :-). I was hoping for a late Christmas prezzie. Seriously though, I appreciate the confirmation.

The worrying thing is that all three factors trend to become asymptotic about the X axis (time) and converge on much different scenario than we have today.

Comparing needed economic growth to what we are likely to generate with available oil and gas, it seems like we are facing a continuing problem.

Even on it's own, that seems like an optimistic statement. When I consider all the other issues, a "continuing problem", looks more like a brick wall.

To be forewarned is to be forearmed I guess.

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27 comments on My Top 10 Energy Stories of 2008

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